Banking as an institution, to date, remains a highly formal, inflexible, inefficient, and impersonal interaction between people and their money. Unless one chooses a seemingly infeasible option of operating and interacting in the world on a strictly cash basis, which would require carrying around risky sums of cash, to date, people have been at the mercy of banking institutions when interaction with each other involving money.
As an example of the extreme formality, banking laws and practices have built up around negotiable instruments for such interaction and resulting transactions. For instance, cashier's checks, certified funds, wire transfers, Automated Clearing House (ACH) transfers, credit cards, debit cards, and their associated legal institutions serve to protect parties (including banking institutions) from unscrupulous actions by the parties.
However, as the inexorable march of technology progresses, banking institutions as a whole have been slow to adapt, owing largely to risk aversion when it comes to suffering financial losses, which tends forward inflexibility regarding deploying technological advancements. For instance, while the automatic teller machine (ATM) has been in development since before the 1960's and has largely replaced customer-teller transactions, only recently have ATMs been widely employ optical character recognition (OCR) technology to accept negotiable instruments as deposits, which eliminated the tedious deposit slip and envelope and subsequent manual or semi-automated processing. As a further example, inter-account transfers are practically limited to occurring between large institutions (e.g., wire transfers and/or ACH transfers between a bank and another institution such as a creditor, or another depository institution).
As such, this leads to inefficiencies when a sender/payor/transferor/debtor desires interacting financially with another person. As an example, assume a sender/payor/transferor/debtor desires making a payment to a recipient/payee/transferee/creditor. The sender/payor/transferor/debtor must retrieve funds (cash, certified funds, obtain ability to draft negotiable instruments on an account with the institution, etc.) from an institution, arrange a meeting with the transferee (for untrusted transactions), escrow arrangement (with concomitant fees), or other arrangement to send payment of cash or check, then the recipient/payee/transferee/creditor must then make arrangements to deposit funds into an account (e.g., if by payment is negotiable instrument). Moreover, behind the scenes, there is an impersonal web of intractable agreements that governs how many days the funds can be held before becoming available, fee agreements that govern what fees are to be paid for accessing the funds, and so on, etc.
In sum, the ability for people to interact financially with each other remains tied to the formal, inflexible, inefficient, and impersonal conservative institutions that have developed over 500 years of banking history. For trusted transactions, e.g., between parties who know or trust each other, either by personal history, proximity, or otherwise, many of these hurdles can be eliminated to approximate a face to face cash transaction. Thus, there can be improvements made to these institutions such that the interactions more closely approximate a face to face cash transaction between trusted friends.
In addition, whereas with the increasingly wired and wireless world, virtual interactions take place between people (arguably just as much as, if not more than, real world interactions. For example, countless times a day people email, Short Message Service (SMS) or text message, Multimedia Messaging Service (MMS), Skype®, instant messaging (IM) (e.g., ICQ™, AOL® IM or AIM®, etc.), interact through Facebook™, Twitter™, Internet Relay Chat (IRC), and countless other communication platforms that bring people closer together. Moreover, people are making ever-increasing use of mobile devices as compared to fixed devices for their interactions.
Accordingly, whereas conventional implementations of banking practices involving technological improvements seems to merely layer these methods of interactivity onto existing infrastructure and policies, the practices remain formal, inflexible, and inefficient, while becoming even more impersonal, such as by increasingly cutting out the human interaction.
The above-described deficiencies are merely intended to provide an overview of some of the problems encountered in financial transactions between individuals, electronic payment systems, and supporting methods and devices and are not intended to be exhaustive. Other problems with conventional systems and corresponding benefits of the various non-limiting embodiments described herein may become further apparent upon review of the following description.